The UK’s latest inflation hike is likely to cause further damage to the hospitality sector, both in terms of sales and staffing, say sector trade groups.
The Office for National Statistics yesterday announced that inflation rose to a two-and-a-half-year high in April, recording a 4.5 per cent increase on last year. When taken on a monthly basis, prices rose by 1 per cent between March and April.
However, with alcohol being one of the most significant drivers of the overall price hikes, as measured by the CPI (consumer price index), price increases in the sector were much higher.
Alcohol price rises
Between March and April 2011, the price of alcoholic drinks and tobacco rose by a record 5.3 per cent compared with a rise of 2.1 per cent a year ago, prompted by the increase in excise duties on alcohol and tobacco.
Trade group British Beer & Pub Association (BBPA) said increases in alcohol prices are particularly worrying as they could propt further inflationary pressure.
Brigid Simmonds, BBPA chief executive said the “worrying” CPI increase “confirms our fear that alcohol duty increases announced in the Budget are having a knock-on effect on the wider economy.
“We warned the Chancellor before the budget that inflationary pressures partly fuelled by excessive duty increases would set back growth and cost British jobs – 10,000 jobs this year alone,” she added. “As families tighten their belts and the cost of a pint and a meal out at the pub keeps on rising, this is bound to have a detrimental impact on the pub and hospitality sector.
“(The) increase must serve as a warning to the Chancellor that the beer duty escalator is not a cost-free measure as it runs the real risk of further inflationary pressures and lost jobs. We have a huge economic impact on a range of industries throughout the supply chain, from the farming of hops and barley through to the thousands of businesses that supply our pubs. With the right policies we could be creating many new jobs and helping the UK economy to grow.”
Martin Couchman, deputy chief executive of the British Hospitality Association (BHA) added: “It is worrying that the level of inflation seems to be persisting above the expectations of the Bank of England, impacting on both consumers and industry.
“The level of food price inflation has an enormous effect on hospitality businesses which spend over 10bn pounds every year on food,” he told BigHospitality.